NTRT Netratings (MM)

Delivers EBITDA Profitability in the Fourth Quarter NEW YORK, March 9 /PRNewswire-FirstCall/ -- NetRatings, Inc. (NASDAQ:NTRT), a global leader in Internet media and market research, today announced financial results for the fourth quarter and year-ended Dec. 31, 2005. Revenues for the fourth quarter of 2005 were $17.7 million, an 11 percent increase compared to revenues of $15.9 million for the fourth quarter of 2004. Revenues for the year-ended Dec. 31, 2005 were $68 million, up 15 percent compared to revenues of $59.3 million in 2004. During the fourth quarter of 2005, NetRatings reported a net loss of ($713,000), or ($0.02) per share, on approximately 36 million shares, compared with a net loss of ($2.3) million, or ($0.07) per share, on approximately 35.3 million shares, in the fourth quarter of 2004. For 2005, the company reported a net loss of ($8.4) million, or ($0.23) per share, on approximately 36 million shares, compared with a net loss of ($17.4) million, or ($0.50) per share, on approximately 34.6 million shares in 2004. For the fourth quarter of 2005, on an EBITDA basis (a non-GAAP measure that reflects net income/loss excluding interest income/expense, taxes, depreciation, and amortization of intangibles and stock-based compensation), NetRatings reported its first quarter of profitability, earning $779,000, or $0.02 per share, compared to an EBITDA loss in the fourth quarter of 2004 of ($948,000), or ($0.03) per share. During 2005, NetRatings decreased its pro forma EBITDA loss, which excludes a one-time restructuring charge recorded during the third quarter of 2005, to ($1.2 million), or ($0.03) per share, versus a loss of ($8.5) million or ($0.25) per share in 2004. A complete reconciliation of GAAP results to EBITDA and pro forma EBITDA results may be found in the accompanying financial tables and footnote. "We are pleased to have delivered on our fourth quarter objectives, and to report, for the first time, EBITDA profitability," said William Pulver, president and CEO, NetRatings. "Since our inception, we have balanced strategic and prudent investments with our goal of profitability, to position NetRatings for a strong future. Today -- as we look toward a full year of EBITDA profitability in 2006 -- our assets include a comprehensive Internet media and market research product portfolio based on patented technologies, a client base of more than 1,600 companies, and a globally recognized brand that stands for quality and innovation. As Internet advertising grows and the digital media landscape continues to evolve, we look forward to providing relevant Nielsen//NetRatings products and services to meet the needs of the industry." Patent Enforcement Update In early 2005, NetRatings commenced a patent enforcement program to protect the company's investments in its patented technologies related to the collection, analysis and reporting of computer usage and activity. Under the program, NetRatings filed patent infringement lawsuits against six companies, and, to date, has signed licensing agreements with three of these companies: Visual Sciences LLC, SageMetrics, Corp., and Omniture, Inc. Pulver commented, "We are delighted with the early success of this program, confident in the strength of our patents, and optimistic about our opportunity to add additional licensees to the program." Stock Repurchase Program Update In November 2005, NetRatings' board of directors authorized the repurchase of up to $25 million of the company's common stock. Under the plan, NetRatings spent $13.5 million to repurchase one million shares in the fourth quarter of 2005, and an additional $11.5 million to purchase 900,000 shares in 2006. The company ended the year with $180 million in cash and marketable securities, compared to $194 million at the end of the third quarter of 2005. Guidance For the first quarter ending March 31, 2006, NetRatings is projecting the following: -- Revenue is expected to be between $17.6 million and $18 million -- Net loss per share on a GAAP basis is expected to be between ($0.03) and ($0.05) -- EBITDA per share is expected to be between $0.00 and $0.02 For the full year 2006, NetRatings is projecting the following: -- Revenue is expected to be between $75 million and $78 million -- Net loss per share on a GAAP basis is expected to be between ($0.07) and ($0.13) -- EBITDA per share is expected to be between $0.09 and $0.15 Fourth Quarter/Year-End 2005 Conference Call Today at 4:30 p.m. ET, NetRatings management will host a conference call and Webcast to discuss its fourth quarter and FY 2005 results and 2006 business outlook. The company welcomes all members of the financial and media communities to visit the "Investor Relations" area of http://www.netratings.com/ to listen to the conference call via live Webcast. About NetRatings NetRatings, Inc. delivers leading Internet media and market research solutions, marketed globally under the Nielsen//NetRatings brand. With high quality, technology-driven products and services, Nielsen//NetRatings is the global standard for Internet audience measurement and premier source for online advertising intelligence, enabling clients to make informed business decisions regarding their Internet and digital strategies. The Nielsen//NetRatings portfolio includes panel-based and site-centric Internet audience measurement services, online advertising intelligence, user lifestyle and demographic data, e-commerce and transaction metrics, and custom data, research and analysis. For more information, please visit http://www.nielsen-netratings.com/. Safe Harbor Statement This press release contains statements that may constitute forward-looking statements pursuant to the safe harbor provisions of the Private Litigation Reform Act of 1995. These forward-looking statements are based on current expectations and assumptions and involve a number of uncertainties and risks that could cause actual results to differ materially from those currently expressed in any such forward-looking statements. Information about potential factors that may affect NetRatings' business and financial results is included in its annual report on Form 10-K for the fiscal year ended Dec. 31, 2004 and its quarterly reports on Form 10-Q, including, without limitation, under the captions "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors That May Affect Our Performance." Each of these documents is on file with the SEC and is available free of charge. Readers of this press release are referred to such filings. The forward-looking statements herein speak only as of the date of this press release. NetRatings does not undertake to update any forward-looking statement that may be made from time to time by it or on behalf of NetRatings. NetRatings, Inc. Statements of Operations (in thousands, except per share data) Three Months Ended Twelve Months Ended December 31, December 31, 2005 2004 2005 2004 unaudited unaudited Revenue $17,683 $15,932 $68,017 $59,294 Cost of revenue 5,547 5,467 22,651 23,057 Gross profit 12,136 10,465 45,366 36,237 Operating expenses: Research and development 2,732 2,624 11,580 12,029 Sales and marketing 6,391 5,687 25,718 22,801 General and administrative 3,027 3,676 12,130 12,588 Restructuring expenses -- -- 1,700 (525) Litigation settlement recovery -- -- -- (1,800) Amortization of intangibles 594 781 2,761 3,742 Amortization of stock- based compensation 1,046 759 3,377 7,587 Total operating expenses 13,790 13,527 57,266 56,422 Loss from operations: (1,654) (3,062) (11,900) (20,185) Equity in earnings of joint ventures -- 48 56 129 Interest income, net 1,453 776 4,519 2,879 Minority interest in gains of consolidated subsidiaries (192) (73) (750) (242) Net loss before provision for income taxes (393) (2,311) (8,075) (17,419) Provision for income taxes (320) -- (320) -- Net loss $(713) $(2,311) $(8,395) $(17,419) Basic and diluted net loss per common share $(0.02) $(0.07) $(0.23) $(0.50) Shares used to compute basic and diluted net loss and pro forma EBITDA net income/(loss) per common share 35,989 35,307 35,985 34,637 Pro Forma EBITDA (1) unaudited Net loss $(713) $(2,311) $(8,395) $(17,419) Less: Interest income, net (1,453) (776) (4,519) (2,879) Provision for income taxes 320 -- 320 -- Restructuring expenses -- -- 1,700 (525) Litigation settlement recovery -- -- -- (1,800) Depreciation 985 599 3,565 2,763 Amortization of intangibles 594 781 2,761 3,742 Amortization of stock-based compensation 1,046 759 3,377 7,587 Pro Forma EBITDA $779 $(948) $(1,191) $(8,531) Pro Forma EBITDA income/(loss) per common share $ 0.02 $(0.03) $(0.03) $(0.25) (1) Pro Forma EBITDA reflects net income/loss excluding interest income/expense, taxes, depreciation, restructuring expenses, litigation settlement recovery, amortization of intangibles and stock-based compensation. Management uses this measure internally to evaluate the company's performance. NetRatings provides results, guidance and associated reconciliation of this non-GAAP measure to the investment community, as we believe it provides consistent and comparable measures to help investors understand our current and future operating cash flow performance. Interest income/expense is excluded as it is not related to our operating performance. Depreciation expenses and amortization of stock-based compensation are excluded as they are non-cash charges. NetRatings excludes restructuring expenses and litigation settlement recoveries as they are one-time items not directly related to operations. NetRatings excludes amortization of intangibles as it is a non- cash charge not directly related to operations. Pro Forma EBITDA data is provided as a complement to results provided in accordance with GAAP, and should be considered in addition to, and not as a substitute for or superior to, other measures of financial performance prepared in accordance with GAAP. Reconciliation of net loss per share to EBITDA per share for first quarter and full year 2006 guidance. Three months ending Year ending Mar. 31, 2006 Dec. 31, 2006 Net loss $(0.05) $(0.03) $(0.13) $(0.07) Adjustments Interest income, net (0.03) (0.03) (0.13) (0.13) Provision for income taxes 0.01 0.01 0.03 0.03 Depreciation 0.02 0.02 0.12 0.12 Amortization of intangibles 0.02 0.02 0.07 0.07 Amortization of stock-based compensation 0.03 0.03 0.13 0.13 EBITDA income per share guidance range $0.00 $0.02 $0.09 $0.15 NetRatings, Inc. Balance Sheets (in thousands) December 31, December 31, 2005 2004 ASSETS unaudited Current assets Cash, cash equivalents & marketable securities $151,671 $146,195 Accounts receivable 16,537 13,679 Other current assets 3,867 4,276 Total current assets 172,075 164,150 Long-term marketable securities 28,581 51,407 Property and equipment 7,827 5,977 Intangibles 13,278 16,039 Goodwill 76,856 74,897 Other assets 1,637 1,987 Total assets $300,254 $314,457 LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable & accrued expenses $21,436 $20,612 Deferred revenue 12,666 11,435 Restructuring liabilities 1,038 625 Total current liabilities 35,140 32,672 Restructuring liabilities, less current portion 418 799 Total liabilities 35,558 33,471 Minority interest 1,298 548 Stockholders' equity 263,398 280,438 Total liabilities and stockholders' equity $300,254 $314,457 Contact: Susan Hickey NetRatings, Inc. 212-703-5909 DATASOURCE: NetRatings, Inc. CONTACT: Susan Hickey of NetRatings, Inc., +1-212-703-5909, or Web site: http://www.netratings.com/

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